BarroMetrics Views: Currency Wars
As countries continue to ‘print money’, incredible opportunities abound in the forex markets. My strategy is a simple one:
- Find the Government that is most anxious to weaken its currency;
- Find another whose Government is less willing to weaken its currency;
- Sell the weak against the relatively stronger one.
The great thing is we now have technical tools that allow us to see at a glance, the relative strengths and weaknesses. A number of sites have sprung up that show the relative strength of a single currency; e.g. Currency Strength Meter.
Figure 1 shows, on a weekly basis. the three weak currencies at the moment: JPY, AUD and CAD. Figure 2 shows the strong ones. So, it’s a question of finding a pair to your liking.
For example, one pair I like is the GBPJPY (Figure 3). Of course, that is not the end of the story, you still need to perform your normal analysis before taking the trade.
FIGURE 1 Weak Currencies
FIGURE 2 Strong Currencies
FIGURE 3 GBP/JPY